1. The Economics of Sports and Entertainment Copyright © Texas Education Agency, 2011. All rights reserved.

2. Copyright and Terms of Service Copyright © Texas Education Agency. The materials found on this website are copyrighted © and trademarked ™ as the property of the Texas Education Agency and may not be reproduced without the express written permission of the Texas Education Agency, except under the following conditions: 1)Texas public school districts, charter schools, and Education Service Centers may reproduce and use copies of the Materials and Related Materials for the districts’ and schools’ educational use without obtaining permission from the Texas Education Agency; 2) Residents of the state of Texas may reproduce and use copies of the Materials and Related Materials for individual personal use only without obtaining written permission of the Texas Education Agency; 3) Any portion reproduced must be reproduced in its entirety and remain unedited, unaltered and unchanged in any way; 4) No monetary charge can be made for the reproduced materials or any document containing them; however, a reasonable charge to cover only the cost of reproduction and distribution may be charged. Private entities or persons located in Texas that are not Texas public school districts or Texas charter schools or any entity, whether public or private, educational or non-educational, located outside the state of Texas MUST obtain written approval from the Texas Education Agency and will be required to enter into a license agreement that may involve the payment of a licensing fee or a royalty fee. 2 Copyright © Texas Education Agency, 2011. All rights reserved.

3. Profit Amount of money remaining from revenues after all expenses are paid Money a business receives from the sale of goods ands services. 3 Copyright © Texas Education Agency, 2011. All rights reserved.

4. Movies Ticket sales in the U.S. have increased for more than a decade in the U.S. Costs of production and marketing movies have increased faster than ticket sales. 4 Copyright © Texas Education Agency, 2011. All rights reserved.

5. Strategies for Movie Studios Joining forces with rival studios to split production and marketing costs and share box-office ticket sales and other income sources Reducing economic risk partnerships with rival studios to help produce, promote, and distribute films little money tied up in studio facilities or ongoing personnel costs 5 Copyright © Texas Education Agency, 2011. All rights reserved.

6. Profit Motive Using resources in ways that result in the greatest profit NFL revenue is in excess of $5.5 billion shared among 32 members players receive about 59.5 percent of the revenue about $150 million per season is transferred from the top 15 high-revenue teams to the lower- revenue teams 6 Copyright © Texas Education Agency, 2011. All rights reserved.

7. Concerts Popular entertainers can charge $50,000 to over $100,000 for a performance Expenses for concerts include security, tickets sales personnel, sound system, marketing, port-a-potties, etc. Concert planners decide on ticket prices to earn the desired profit Sponsorships help pay for concerts 7 Copyright © Texas Education Agency, 2011. All rights reserved.

8. College Sports Want sold-out venues Popular football teams have stadiums that hold more than 100,000 people Colleges must pay for security, ticket sales personnel, utilities, etc. Universities earn money from televised games Universities in conferences are required to share some of their profits from bowl game appearances with other members of the conference 8 Copyright © Texas Education Agency, 2011. All rights reserved.

9. Cultural Opportunities for Profits International release of movies-can increase box- office take by 50 to 100 percent over domestic ticket sales China has 1.3 billion people (huge possible market for movies) pirated movies result in shrinking movie ticket sales Chinese government tightly controls the content, filming location, and distribution of films released in China Chinese films must avoid political and religious topics Chinese government limits distribution of non-Chinese films and television programming to limit competition and exposure to foreign cultures 9 Copyright © Texas Education Agency, 2011. All rights reserved.

10. Economics Study of how goods and services are produced, distributed, and consumed Macroeconomics Study of the economics of the entire society (the big picture) Example: study of all sports and entertainment events 10 Copyright © Texas Education Agency, 2011. All rights reserved.

11. Economics Microeconomics Study of the relationships between individual consumers and producers Example: study of economic impact of concerts in the United States 11 Copyright © Texas Education Agency, 2011. All rights reserved.

12. Sports and Entertainment Economics People have limited time and money to spend on sports and entertainment. They must decide how to spend their limited resources. Decisions are based on the amount of satisfaction that people believe they will receive from the sports and entertainment product-economic utility 12 Copyright © Texas Education Agency, 2011. All rights reserved.

13. Types of Utility Form Utility Place Utility Time Utility Possession Utility 13 Copyright © Texas Education Agency, 2011. All rights reserved.

14. Managing Sports and Entertainment Events The process of accomplishing the goals of an organization through the effective use of people and other resources Functions of management planning organizing implementing controlling 14 Copyright © Texas Education Agency, 2011. All rights reserved.